Commodity prices witnessed a broad-based slide on Wednesday, as weak economic data from China and Europe reinforced fears about demand, while a rally in the dollar following a major victory for Republicans in mid-term elections in the US also made prospects of raw material imports by other countries bleak. Brent crude oil, gold and silver hit fresh four-year troughs intra-day, while copper dropped to its lowest in two-weeks and farm commodities, too, saw a decline.
The Thomson Reuters Jefferies CRB index, which tracks the movement of 19 commodities, was down 0.28% at 267.38 by 8.53 ET on Tuesday.
Latest data showed that China’s services sector growth slowed in October, just days after factory output witnessed subdued growth, hurting demand outlook for most commodities of which China is the key consumer. Moreover, slower-than-expected business growth in Euro zone in October, which was slightly better than a ten-month trough in September, too, weighed in. The dollar also rallied to a four-and-a-half year high, making commodity imports unattractive for users of other currencies.
December brent crude futures eased 65 cents to $82.15 a barrel by 1130 GMT, having hit $81.63, its lowest since October 2010 earlier in the session. US crude dipped 35 cents to $76.84 a barrel, having hit a three-year low of $75.84 in the last session.
Analysts said apart from other major producers, consistent supplies from Libya and Iraq, which were expected to produce lower volumes due to conflicts, has worsened the pressure on the market already witnessing a drop in demand. Investors are now awaiting weekly inventory data from the US Energy Information Administration (EIA) later in the day for more indications on demand. Crude oil prices have dropped by more than 30% since their June peaks.
Spot gold was down 2% at $1,145.05 by 1122 GMT, having dropped to as low as $1,143.66 an ounce, its meanest since April 2010, as strengthening dollar reduced appeal for haven assets. US gold futures eased $23.20 an ounce to $1,144.40. Silver fell even at a sharper pace and dropped to its lowest since February 2010 at $15.17 an ounce. lack of strong physical demand from China, the top gold consumer, also weighed.
Copper fell to a two-week low on worries over slowing growth in top consumer China, though supply worries in Peru reined in losses.
Three-month copper on the London Metal Exchange dropped to $6543 a tonne, the meanest level since October 20, before pulling back to $6,567 a tonne by 1026 GMT, still down 1.21%.
Among other base metals, LME lead fell to its lowest in more than a year-and-a-half at $1,955.50 a tonne.
Among farm commodities, corn dropped 0.89%, wheat 1.04%, cocoa 0.2% and cotton by 0.73% on CBOT as of 8.38 ET.
Gold prices hit 3-year low in India
Gold prices in Delhi dropped R450 to R25,900 per 10 grams, its lowest in three years, responding to the global cues. Deferring purchases by some customers in expectations that prices would fall even further stoked aided the decline as well, jewellers said. Silver followed the suit and plunged by R900 to R35,050 per kg.